Aberdeen Getting is a Bit Busy

[mearnsfool]

At the moment and for the past few months Aberdeen is getting a bit busy. With the service companies scared to take on new staff or longer term contractors, existing people in these companies are finding it difficult to get all the work requiring done, finished at the end of the day.

As yet most service companies and design and project management companies do not trust the oil companies to come up with the goods, say a 6 month or 2 year contract that they got prior to 2014.

Interesting to see what the late summer will bring with regards to contracts and orders placed or will it go quiet again.

[mearnsfool]

Update after another few months on Aberdeen.

The busier time is still here with most companies busy and others not so busy.

General feeling is that the small increase in workload is staying about constant with contractors taking on some younger labour that cannot demand high rates but no step change in employment in the area.

The labour supply is slowly getting to the point that companies will have to start enticing staff from other companies. In saying that to entice labour from an existing employer takes a rise in pay rates and the clients, the oil companies are still expecting lower labour rates from the contractors.

In 2012 and mid 2013 when a contract was coming to an end, labour could move on to another project with an existing employer or move somewhere else with ease with just a few phone calls and no time at all on the bench.

A quick non scientific straw poll this week among well skilled and articulate engineers suggested even those with specific skills that are in demand, would still have a gap of about 4 to 6 weeks between projects.

Again, hearing of people finishing a contracts with nothing to follow but getting some interest in their skills from the market.

Better than 18 months ago but a slow climb back up the hill.

[dspp]

Update after another few months on Aberdeen.....

A quick non scientific straw poll this week among well skilled and articulate engineers suggested even those with specific skills that are in demand, would still have a gap of about 4 to 6 weeks between projects.

Thanks, interesting.

I did an analysis* over the last few days that suggested that globally at a point in about 10-15 years there could be no need for any more conventional (fossil) newbuilds, either for depletion replacement / obsolescence or for incremental capacity.

This suggests that there might only be one, or at best two, cycles of activity left for places like Aberdeen in their current core markets. To what extent does your straw-poll group see this ahead ? Right now I have a G&G lodger who is softrock geophysics and who would ordinarily have gone into E&P. He chose to go into renewables. He thinks he dodged a bullet ! The youngsters are thinking ahead. (He didn't realise what I did for a living when he became one of my lodgers, so found it a bit scary when I could reel off the backgrounds of each of the projects he is working on, worldwide).

* I'll post details of that analysis on another thread on this board when I get time. But right now I have to get a plane.

regards, dspp

[mearnsfool]

Two answers to that, the younger ones just see working in the Oil Industry as the job they are doing today and may well be working in any other industry in the future. Just like you lodger.

The over 45's that saw the Oil Industry as a "Good Job" up to around 2014 and like that generation they have a certain "loyalty" to the industry they work in.

To an extent they are quite sad at future prospects and short of a major blow up in the Middle East are not particularly expecting better times to come any time soon, if at all.

They have a nice house up here and have little interest in moving as they have gone through the travelling phase or they thought that they had gone through that phase.

Not an issue for me as I have been retired a good few years. I only do guest appearances for a few days every three months or so for a few clients who have got rid of various discipline engineers.

They need an all-rounder to do any of the stuff that they can longer can handle but they have clients who believe that they have a wide variety of engineering disciplines on call at other offices!!!!!!!!!!

As of next spring the new IR35 rules may reduce my income for those short term tasks by I guess 25% and to be honest the thought of getting up early in the morning to go to work is less and less attractive.

I will be interested in your musings on the future but wonder where the feed stocks will come from in the future as many installations are very rusty or do you see it all being done from onshore wells.